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Wise believes in “money without borders.” However, UK fintech specializing in international transfers believes stock investors are far more constrained.
Wise said Thursday that he plans to forward the main list to a US exchange. They hope that a larger, more liquid capital market will boost its valuation and that more exposure will make it easier to attract US customers.
The switchover of London’s third largest listed technology group (at £11.5 billion) like this will rekindle debate over whether the UK market is trapped in a downward spiral. It could also be little profitable for the wise itself.
There is little evidence that travelling to the US actually helps most businesses in the long term. The institutions there already have easy access to foreign stocks and are the largest shareholder group of most FTSE 100 companies. More money will coalesce around the US index, but Wise is not initially expected to qualify for these. Also, there is a larger pool of retail investors in the US, but that is usually not the most reliable group for sustainable long-term investments.
Moreover, most of the UK’s most valuable companies have no problem reaching international customers. The majority of the FTSE100’s revenue comes from overseas. Wise’s main goal is US banks. This should be refined enough to handle suppliers that happen to be listed overseas.
A study by UBS found that list locations had little impact on assessments. Certainly, according to S&P Capital IQ data, the FTSE 100 is a transaction with a transfer ratio of 12.9 from the price, compared to the S&P 500’s 22.4. But that’s because US indexes are dominated by faster-growing companies.
When UBS compared peers, British companies were often more expensive and not less. Individual analysis by FT similarly had little advantage to either European companies shifting listings to the US or private European groups pursuing initial public offerings. It encourages many investors to reassess US exposure, even before considering the potential impacts of recent markets and political volatility.
City cheerleaders should still pay attention. The London issue may be more of an atmosphere than a data-driven one, but the image issue is still a problem. Its bad reputation was particularly difficult to shake up between US venture capital and growth investors, who control funds for the most attractive technology groups, including Wise. Finding ways to plead them – or developing a stronger homemade venture industry is a serious challenge.
Meanwhile, wise has earned a short-term boost. It retreated after stocks rose more than 10% on Thursday. There’s a good reason it keeps rising – business is progressing towards its goals. However, the company itself does not have to cross the border to get there.
nicholas.megaw@ft.com
